How to make money with Partnership

If we start relating partnership with our daily life, its inherent part of our life. Also, in business you must maintain a relation with other entrepreneurs to practically establish the business idea.

In India partnership is not a diffrent legal entity but we are not here to discuss legality of partnership but to explore this option of business over other option have now in business

“In partnership two or more people start business with intention to earn profit and distribute it in an acceptable ratio. Here ratio is defined by partners mutual consent. “as per legal status in India.

But as we know we don’t only share profit but also share our risk, reward and our life goals also. Most of the times partners must sacrifice their own goals about life. This led to a conclusion as we must share more than we have.

Now we discuss each one with a practical scenario

There are two type of risk in market operational risk and financial risk. Operational risk involves risk about negative outcome than expected by production department. However financial risk meaning possibility of cash insolvency, financial interest.

Before entering into partnership make sure your partner has basic skill and competence to provide a cushion for any operational risk. Each partner should follow Standard of Operation, aware of standard in industry and accept necessary provision for any loss in future.

For financial risk ask a financial advisor and ask your partner to discuss all doubts before start of partnership.

Profit and loss ratio should be known to company that lead to a trust among partner.

Budget is a great tool that lead to manage and predict profitability of company that lead to a neat and clean business in future years.

Goals are two types here personal goals and professional goals. In partnership distribution of profit is decided at the end of the year. Partner must manage their personal goals based on partnership firm. It is better to decide partners about their personal goals. Personal goals should not be sacrificed for a better partnership after a specified period.

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